Paul Jacobson, executive vice president and chief financial officer of General Motors, made a telling observation about GM’s current approach to electric vehicles at last week’s Federal Reserve Bank of Chicago’s 32nd Annual Automotive Insights Symposium in Detroit.
As you may recall, back in January 2021 GM CEO Mary Barra had announced the “aspiration” to end the production of gasoline- and diesel-powered vehicles by 2035, ushering in an all-electric future.
Times change.
At the Fed conference Jacobson said: “What we see right now is a regulatory environment that is more aligned with where the consumer demand sits right now, particularly taking about electric vehicles.”
Said environment—the elimination of CAFE penalties for OEMs; the elimination of the $7,500 tax credit for consumers—resulted in a market share of EVs in 2025 of 7.8 percent.
Of the vehicles GM sold in the US in 2025, some 6 percent were EVs.
Since October GM has announced $7.6 billion in charges related to EVs.
However, while acknowledging the non-trivial amount of money related to scaling back on its EV efforts—from programs to manufacturing to suppliers—Jacobson insisted:
“It’s not were giving up. We’re not throwing in the towel. That was about an infrastructure that was geared to be able to make a million EVs a year. Because that’s what the regulatory environment was telling us we needed to do. . . .”
(Was the consumer a consideration in any of this?)
So with external change comes internal change, which led to non-trivial charges.
Jacobson continued:
“We think demand is going to be much more naturally accretive. It’s not going to zero.”
He said:
“Electric vehicles are going to win in the end.”
He added to that thought:
“But it’s going to take some time.”
Jacobson explained that because there is reduced EV market demand, it gives GM “an opportunity to help bring the costs down at the same time volume is going to ramp up naturally going forward.”
So they’re working on things like lithium manganese-rich (LMR) batteries, which are lower cost than the presently common nickel manganese cobalt (NMC) batteries, and switching from pouch cells to prismatic cells, which are less expensive.
He said that the current uncertainty in the market “is a little bit of a blessing in disguise because with lower EV demand it gives us a period of time where we can focus on that architecture.”
And he said the transformation that it going to help the company achieve variable profitability on its entire EV lineup is “going to take a little bit of time. But I don’t think it’s a terrible thing where we sit in terms of our ability to buy a little bit of time to fix some of the cost challenges.”
But time may be something GM and other OEMs may not be able to buy.
Mark Wakefied, Automotive Market Lead, Executive Partner & Managing Director, AlixPartners, spoke in a later session.
“EVs and technology is where the business is competing going forward,” Wakefield said.
He showed an example of the vehicle domain controller for the current Xiaomi YU7 EV, which combines the vehicle domain controller, driver assistance controller, cockpit infotainment, and telematics into a single package, and compared it to “what GM is saying they’re going towards, which is sort of the same thing. But they’re doing it in 2028 and they’re doing it on one niche product, the Cadillac Escalade IQ.”
“This is emblematic of that, even if you know point B, the speed to get there is pretty critical.”
“The speed to get there is pretty critical.”
The Xiaomi YU7 is a midsize lux electric SUV. While it has a price that would translate to about $36,000, probably that number would be closer to $50,000 were it available in the US market (taking into account various things associated with, say, coming into compliance with US regulations, such as safety).
The Escalade IQ is a seven-passenger lux electric SUV that has a current starting MSRP of $127,405.
What we have here is a case where tech that some Chinese companies are putting in vehicles now making it to US vehicles in a couple years. And realize that while the Xiaomi YU7 has a higher price than the average light vehicle transaction price in China—which is about $23,000—the ratio between the average transaction price in the US today (about $50,000) and the price of an Escalade IQ is a whole lot higher than the delta between the YU7 and the average transaction price in China. So not only is there a difference in time, there is also a difference in comparative affordability (another subject onto itself).
Time is something that arguably GM and Ford don’t have a lot of. Rumors of Ford talking with Xiaomi and BYD aren’t as surprising today as they would have been a year ago.
In January Canadian prime minister Mark Carney announced an agreement with China wherein there will be 49,000 China-built EVs coming into Canada at a reduced tariff. As in 6.1percent vs. 100 percent. That number will go to 70,000 units in five years. And by 2030 at least 50 percent of the imported vehicles must have a transaction price of C$35,000 or less.
Last Thursday Carney announced the establishment of an EV purchase rebate of up to C$5,000 and C$1.5 billion to expand changing infrastructure.
And more important, arguably, than that, he announced a “productivity super-deduction” that lowers the marginal effective tax rate on investments for manufacturing EVs in Canada. Which makes the country more competitive for building EVs.
Admittedly the Canadian market is fairly small, about 1.9 million units. According to Statistics Canada (latest figures) in November 2025, zero emissions vehicles (EVs and plug-in hybrids) accounted for 11.3 percent of the market, down from 16.4 percent in November 2024, but it should be noted that the EV purchase incentive plan that had been in place ran out of money in January 2025 so those November numbers are unenhanced consumer purchases.
Were a Chinese company to set up an EV manufacturing operation in Canada, regardless of what the USMCA says now or will say should it be renegotiated, there is no way that it would be able to ship vehicles to the US.
However, someone with a good set of binoculars will be able to see from Ford’s Detroit Michigan Central or the new GM HQ Chinese EVs rolling on the street of Windsor, Ontario. And if they were to learn that those vehicles had advanced tech and a lower price point, how would they feel about what they have on offer here?
Yes, domestic OEMs will get to where they need to be.
But they should not think in terms of “buying time” and more in the sense of “the speed to get there.”
